On 18 September 2008, Workplace Minister Julia Gillard unveiled
the Rudd Government's proposed new unfair dismissal laws that
will allow companies with less than 15 employees to terminate an
employee's employment after giving them one warning and time to
improve their behaviour.
The Labor party proposes to replace the Howard Government's
WorkChoices regime in which every business with 100 employees or
less is exempt from unfair dismissal laws.
Under the new scheme, which is intended to come into effect on 1
July 2009, a small business employer will be able to dismiss an
employee with less than 12 months' service at any time without
Once the 12 month period has passed, to fairly dismiss an
employee, small business employers will have to comply with a new
Fair Dismissal Code for Small Business which includes a
The two critical things that a small business employer must do
to comply with the code are:
Give the employee one warning, based on a reason that validly
relates to the employee's conduct or capacity to do the job;
Provide a reasonable opportunity for the employee to improve
his or her performance.
Gillard claims "it is that simple". Multiple warnings
are not required and while written warnings are desirable, they are
Gillard also advises that employers can still terminate an
employee's employment without notice for serious misconduct for
reasons including theft, fraud, violence and serious breaches of
occupational health and safety procedures.
All unfair dismissal disputes will be handled by the new
arbitration body Fair Work Australia, which Gillard says will use
"fast and informal processes". Legal representation will
be allowed only in exceptional circumstances.
Compensation will be capped at six months' pay, with the
full amount only available for the most serious cases.
Interestingly, it appears that the focus will shift to compensation
rather than reinstatement as the primary remedy.
This scheme however is not without political objection
– including union objection. Nor has the legislation yet
to be released. For this reason, small business should continue to
watch this space over the coming months, with the legislation
scheduled for release later this year.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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